Market Basket MBA
Last year, New England bore witness to a brand-new MBA case study. A multi-billion dollar private business, DeMoulas Super Markets, found itself in crisis as workers began protesting and customers began boycotting. Weeks dragged into months, and profits spiraled down to near zero. Shelves and parking lots were empty, and public perception of the brand (which had previously been excellent) was greatly suffering. And what was the reason for this corporate disaster? In a shocking twist to the typical script of worker protest, the desired reward was not better pay or benefits, or the reversal of poor environmental or political action, but rather the maintenance of the status quo; the workers and customers demanded only the reinstatement of a beloved CEO.
The origins of the debacle were simple: Arthur T. DeMoulas, the previous (and now current) CEO of DeMoulas Super Markets, held 49.5% of the company voting stock. Arthur S. DeMoulas (the cousin of Arthur T. DeMoulas) and his supporters held 50.5% of the voting stock. Midway through 2014, the board opted to remove ATD from his executive position and install two outside co-CEOs in his place. Being a closely held private company, the board was never obligated to publicly release meeting notes or any formal reasoning for the removal; however, the narrative had been that the majority voting block was unhappy with how much ATD had been spending on employee benefits, as well as with how low he was keeping product prices. Under ATD, the company offered highly competitive compensation, retirement benefits, and scholarships to employees, and was famously engaged, even on a personal level, with all, including low-level workers.
The corporate world has been under substantial scrutiny for decades, with noteworthy intensity in recent years; many larger businesses have been accused of unchecked greed and an uncaring employee and customer policy. Worries today are fervent over income inequality, the bolstering and corruption of the rich (and their influence in politics), and the mistreatment of the middle class. It was therefore quite fascinating to see thousands of workers and millions of customers spend their time, energy, and paychecks in service of a millionaire boss. Regardless of your position on the core issues at debate, there is little doubt that the crisis demonstrated the power and influence of being a "good boss." If an employer treats their employees well, and shows a genuine respect and interest in their well-being and advancement, then those employees can be endlessly loyal.
It is especially note-worthy that neither player in the Market Basket feud represented the underdog. Both ATD and ASD were (and remain) very rich men. The generous policies of ATD did not meaningfully harm shareholder interest or unfairly keep executive, investor, or board member compensation low. The business was (and remains) wildly successful, with over seventy stores operating throughout New England that reap several billion in annual revenue. While there no doubt exists some opportunities for maximizing profit and further bolstering top-tier compensation (there is always more opportunity for such changes), by forgoing just a very little off the top, ATD was able to garner limitless favor from nearly the entire company below the board, as well as a large amount of the customer base. It is a testament to the power of conscientious management.
It is not a wholly unique perspective on corporate governance and responsibility. Another grocery chain, Whole Foods Market, has become equally famous for their quality treatment of employees; in fact, the founder and co-CEO, John Mackey, wrote a book (and began a subsequent movement) about the principle of good governance: Conscious Capitalism. He argues that careful management of any business, with a balanced focus on creating value at all levels of interest, can create powerful and lasting corporations that maintain public trust and respect while still greatly enriching the lives of it's corporate operators. Other examples of conscious governance include The Container Store and Costo.
This issue, alongside other examples of responsible corporate actors, will almost certainly become a staple of debate in business school programs for years to come. The battle between moral action and profit at all costs has always been a tension point in business curriculum; where does the ideal balance lie? It does seem, however, that the modern trend is toward increasingly better treatment of staff. Ever more leaders in business have begun to take positions on the dangers of unrestrained greed and top-level growth, and warned against a possible coming correction for those businesses that are willing to mistreat their staff in service of next-quarterly growth. Although, contrary examples persist, as some companies still reap enormous growth in the face of public disgust (example: Wal-Mart). No doubt the debate over best practices in corporate governance will be ongoing for decades hence, but the story of Market Basket has made a compelling case for erring on the side of positive employee treatment.
If nothing else, the world of business is never boring.
